Tuesday, 28 September 2010

QUOTE OF THE DAY: On honesty

Misrepresenting facts does not change them. However successfully one might fool another person, faking is ultimately futile. For it does not alter the underlying facts.
   --Tara Smith, quoted in “Six Clarifying Quotes on Honesty

Something to think about for all sides there, from those who (still wholly unrepentant) were misrepresenting Anderton’s “seismic shift” non-comment the day before the earthquake as something it wasn’t, to those promoting Labour pamphlets intimating Labour will cut all GST, not just on fruit and vegetables.

Lying doesn’t change the underlying facts; it suggests that if you have to make something up you no valid criticism of the real facts; and it suggests too that you yourself shouldn’t be taken seriously in the future.

So, bad all round, really.

Honesty is the first casualty of war—and the almost daily casualty of politics.

No wonder politicians aren’t taken seriously.

The Fed’s new “super-stimulus” will not stimulate but destroy. UPDATE 2: “Plan A” for wealth destruction. UPDATE 3: “The US Fed has now laid its monetary cards on the table… its new mandate is to create inflation.” UPDATE 4: Bernard Hickey is a moron.

The global monetary and economic crisis has reached its next phase.  With a world economy already seriously out of whack, into which the first trillion-dollar tranche of economic “stimulus” was poured without effect, Federal Reserve chairman Ben Bernanke is about to press the button to print around three trillion new paper dollars to further devalue the American currency, further dislocate a world economy out of whack (and desperately trying to recover), and potentially initiate the final destruction of the American economy.

If the first “stimulus” merely printed enough paper to keep afloat those zombie malinvestments that were built up over the boom that needed to die in the bust, this last desperate mega-printing will so dilute the American currency that it will no longer even be able to do its job internally of lubricating the division of labour it once made possible, and externally of allowing the American dollar to be virtually the world’s reserve currency.

That he will be pressing the button with the full blessing of virtually every one of the world’s mainstream economist is a measure of just how far mainstream economics is from having a clue what’s going on at this stage of the crisis, any idea of the role that the application of their theories had in causing the global monetary and economic crisis, and any figment of a notion now of any Plan B to remedy what they’ve caused.

Instead, we’re just about to get more of the same, by the truckload.

The world crisis was caused by an enormous worldwide increase in the money supply—around twenty percent year-on-year for more than a decade, compounding—which flooded into credit markets, distorting the capital structure and giving finance companies what they thought would be a never-ending spigot, and spilled over into the world’s housing market, creating the world’s most expensive and biggest-ever housing bubble. 

It is being now “fixed” by nothing less than the same again—only this time on steroids. More cash pouring out of the Fed’s printing presses.

Injecting huge tranches of counterfeit capital into the economy to stimulate the boom was what initially inflated the bubble and caused all the dislocations. Injecting huge tranches of counterfeit capital was the so-called solution wheeled out in the first tranche of bailouts and “stimulus.” Now, with no Plan B even under consideration, the only call we hear from the mainstream is “the same again, only more so.”

If the first hit was like feeding a person crack, and the second hit of bailout crack was like trying to revive the patient with a bigger dose once their come-down started, then this last hit is like trying to revive a dying patient by making their heart explode.

There’s only one word for it. It’s insane.

Whether this massive emission of new money by the central bank is brought about through direct purchases from the central government (“Quantitative Easing”) or from the politically connected banks (“Credit Easing”) is immaterial. The results are exactly the same: they both involve "an expansion of the central bank's balance sheet," as Ben Bernanke himself puts it. Both engender a surge in available money and credit. Quantitative easing, again according to Mr. Bernanke, "is most common in poor countries or in countries wracked by war or natural disasters."[1] Or, the jaded might add, in a country wracked by economic illiteracy.

There really is no Plan B being considered, you know. This bailout crack  is being shovelled straight into the patient’s heart at the very same time as the economic doctors are strapping the patient to a gurney with enough financial regulation to ensure any restructuring is virtually impossible in any place—and the existing regime uncertainty is compounded.

There can only be one result. Economic destruction.

But there really is a Plan B, you know, and it’s the very opposite of the plan being followed. 

The money pumping is an attempt to “fight” falling prices. But rather than pumping the money supply to attempt to make falling prices impossible, and putting in “price floors” and minimum wage laws to make falling prices illegal, economists might realise instead that in falling prices are the very seeds of recovery—opening up the very springs of profitability that will allow viable businesses to lower their own costs and get back on a profitable footing again.

Frankly, "Falling Prices Are Not Deflation but the Antidote to Deflation." 

And Economic Recovery Requires Capital Accumulation, Not Government 'Stimulus Packages'.

And rather than the slide to regulation, and to the protectionism and economic nationalism which is the almost inevitable counter reaction to collapse (phenomena perfectly reflected in yesterday’s call locally to ban the sale of NZ farmland to foreign investors—and calls worldwide for rising protectionism and for new governmental and supranational agencies aimed at global governance of the world economy) what’s needed instead is just what Czech President Vaclav Klaus was recommending yesterday to the United Nations.

I am afraid we are moving in a wrong direction. The anti-crisis measures that have been proposed and already partly implemented follow from the assumption that the crisis was a failure of markets and that the right way out is more regulation of markets. This is a mistaken assumption. [“A big increase in financial regulation...will only prolong the recession,” he earlier told the Financial Times. “The best thing to do now would be temporarily to weaken, if not repeal, various labour, environmental, social, health and other 'standards,' because they block rational human activity more than anything else."]  It is not possible to prevent any future crisis by implementing substantial, market-damaging macroeconomic and regulatory government intervention as it is the case now. It is only possible to destroy the markets and together with them the chances for economic growth and prosperity in both developed and developing countries.
    The solution to this or any other crisis does not lie in rising protectionism [Can you hear that, Bill English?] … The solution doesn’t lie in “more bureaucracy” either, in creating new governmental and supranational agencies, or in aiming at global governance of the world economy. On the contrary, this is the time for international organizations, including the United Nations, to reduce their expenditures [and] make their administrations thinner…

Sadly, there is less than no chance of any Plan B along these lines being adopted anywhere outside the Czech Republic. Which means that the process of rapid economic and capital destruction is now under way.

I’d recommend you do whatever you need to do to protect what you have.

UPDATE 1: Did I say mention the worldwide housing bubble the central banks created?  Australians are still in denial about their housing bubble—a bubble fuelled by their Reserve Bank’s irresponsible credit expansion—a bubble they still refuse to recognise, but which is nearly about to pop.

As  said above, I’d recommend you do whatever you need to do to protect what you have.

UPDATE 2: In a more rational world, one in which there was a rational Plan B, the world would have been out of economic depression in February last year.

instead, we’ve had the same Plan A used by the likes of Hoover and Roosevelt to extend the 1929 correction for another fifteen years of crisis—the same remedies I was warning back in October 2008, before the last election, would be responsible for extending this one.

If you were devising a Plan to ensure that when  markets need to correct, they can’t; that when real savings are being consumed on malinvestments that urgently need to be extinguished, they won’t be; that when an economy needs to be restructured, it won’t be; then this is the plan you’d come up with to extend the collapse and make sure the necessary correction won't happen, just as the Hoover-Roosevelt Plan A did in the thirties:

  1. Prevent or delay liquidation by propping up shaky businesses and shaky credit positions. (Better to flush out the malinvestments quickly, so recovery can get under way.)
  2. Further inflate the money supply, creating more malinvestments and delaying the necessary correction. (Better to maintain the the purchasing power in your pocket rather than dilute it.)
  3. Keep wage rates up --or keep money wages constant when prices start falling (which amounts to the same thing) -- which in the face of falling business demand is a sure recipe for unemployment. (Better to take your cut now, and give your business a chance to restructure.)
  4. Keep prices up (by means of the likes of green-plated building regulations) or add new costs to struggling businesses (such as the dopey Emissions Tax Scam), delaying the necessary corrections that will make businesses profitable again. (Better to let prices fall to the new level they need to post-crash. Trying to help recovery by artificially re-inflating prices is like backing over someone you’ve run over in your car, hoping that it will make the patient better.)
  5. "Stimulate" demand by spending on "infrastructure" projects just to make it look like the government is doing something -- when what that something actually does is to take money from profitable businesses and bid resources away from struggling businesses. (Better if government cuts its coat according to its new cloth, without competing with struggling businesses and raising the prices of now-much-scarcer resources.)
  6. Discourage saving and investment by increasing government spending (all of which is consumption spending) and maintaining high tax rates. (Better if government cuts its coat according to its new cloth, without taking now-much-scarcer resources away from struggling businesses.)
  7. Subsidise unemployment with make-work schemes paid out of money from profitable businesses that will bid resources away from those struggling businesses, delaying the shift of workers to fields where genuine jobs would otherwise be available. (Better to abolish all minimum-wage laws, so everybody who wants to work can work—and work in a job that pays its own way.)

As Murray Rothbard points out in America's Great Depression (from which I draw the above seven points) when you list logically the various ways that government could hamper market adjustments and hobble the adjustment process, you find that you have precisely listed the favourite "anti-depression" arsenal of government policy.

And you’ve listed the “Plan A” that they’re still following.  They have no Plan B.

I said in 2008 all these variants of stimulunacy would be used, and would fail, just as they did in the First Great Depression. They have, and they are. So fasten your seatbelts, because their use now, on steroids, will be responsible for creating the Second Great Depression.

UPDATE 3: Buy gold?  Watch talking heads including Peter Schiff on The Kudlow Report:

“You’re seeing currency destruction going on around the world… The one currency you can’t print more of is gold.”

“The US Fed has now laid its monetary cards on the table… its new mandate is to create inflation. The old mandate was to create ‘price stability,’ but the Fed now views stable prices as a problem that its’ gonna cure by creating inflation.”

“If you’re an American citizen and you own US currency, you’ve got a bullseye on your back and you’re in Ben Bernanke’s cross-hairs.”

UPDATE 4: Bernard Hickey has contrived not to notice that the government’s own central banks have been front and central in pumping up the boom; that their flawed and relentless pursuit of  bogus price stability is at root responsible for both boom and collapse; and he’s now abandoning what he calls the “free market orthodoxy” and plumping instead for protectionism, nationalism and braindead big governmentism.

Fuck him.

He’s an easy read of how bad economic education leads to dire economic reporting.

He rightly derides our high debt, and the fact NZers did so little productively with it in the boom years.  Yet he is oblivious to the place wherein the vast majority of that credit was created: the world’s central banks.

He says we need “measures to control our currency.” Hasn’t he noticed that the Reserve Bank has been pumping and un-pumping our currency for the last decade? With what measure of success we can already see.

He seems to have bought wholesale the idea advanced by Alan Greenspan and elaborated by Ben Bernanke that what was actually responsible for the bubble was an excess of global saving—an “excess” from which Bernard now thinks we should wall ourselves off from. But as George Reisman pointed out when Greenspan and Bernanke advanced this alibi to distract from their own culpability, “the very notion of a saving glut is absurd, practically on its face.”

And he seems to have bought the idea that for the last decades we have had “completely free markets and capital flows”  Free markets! What is he smoking! This hot-shot economics reporters is apparently blind to the fact that in the markets of the last decade there is virtually no price or profit relationship left untouched. You think the age of Muldoonist price controls and interference with profits are dead?  In the last few decades the “orthodoxy” worldwide has overseen:

  • interest rates controlled by an economic dictator with powers Muldoon would have killed for;
  • specific interest rates, such as home mortgages, manipulated through subsidies as well as price controls;
  • indirect currency controls virtually everywhere;
  • direct government manipulation of the gold market by both world govts and the IMF;
  • asset price floors—in addition to the ‘Greenspan put,’ we’ve had money printed and “toxic” assets bought, anything to keep asset values raised ;
  • wage floors, essentially a guarantee of widespread unemployment in a downturn;
  • wage ceilings, especially for executives;
  • direct price controls, especially in medicine and education;
  • good old-fashioned protectionism—not just currency manipulation, but outright tariff and non-tariff barriers;
  • the dismissal of business bankruptcy and liquidation as “old-fashioned”;
  • pumping up illusory profits by inflating the money supply, creating an inflationary illusion of profitability and prosperity;
  • the grant of virtual monopoly powers to the very credit agencies that didn’t know a bad thing even when it was held right under their nose.*

These are just a few of the means by which govts ran price controls and interference with profits in recent decades—and still are.  But Bernard, and hundred of thousands of others trained to view all this as part of a “free market” are too braindead to see them for what they are, and now with the failure of this system of control calls instead for the controls to be tightened!

He has the frankly braindead notion that somehow the people in govt responsible for creating, overseeing and extending this economic disaster need to take back the reins.  He has apparently either lost the brains he once had, or has now reached the point (as it has with most educated in mainstream economics) where the real world has now outstripped his learning, so has resorted to the siren cry of the braindead everywhere: “Bring me more big government! Now!!”

Bernard Hickey is a fucking moron.  That’s all that’s left to be said.

_ _ _ _ _ _

* This list comes from Hunter Lewis’s book Where Keynes Went Wrong: And Why Governments Keep Creating Inflation, Bubbles and Busts. It’s exactly the sort of book that braindead fools like Hickey should be reading, but don’t. Or won’t.

Do **Communists** represent the middle class?

Guest Post by Jeff Perren

Daniel Foster at National Review reports on a "confederacy of liberal groups" who plan to hold a rally in response, they say, to Glenn Beck's rally last month that galvanized hundreds of thousands of patriotic Americans to show up in Washington.

The “confederacy” against Beck claims to represent "America’s embattled middle class.”  There are some mainstream left-leaning groups (the SEUI, the American Federation of Teachers, and others). What's more interesting, though, are the groups the confederacy fails to mention, revealing the counter-rally as just so much, very stale, communist bombast.  The un-mentioned groups include:

  • The Communist Party USA
  • Chicago Democratic Socialists of America
  • Code Pink
  • Committee of Correspondence for Democracy and Socialism
  • Democratic Socialists of America
  • International Socialist Organization
Yawn... It's clear that Progressives are out of ammunition. That won't stop them from initiating kamikaze raids, of course, but they officially now got nothin'. When you align yourself with groups like this, then so far from representing the “embattled middle class,” you're confessing you’ve lost ‘em.

Monday, 27 September 2010

Romeo Y Julietta con una Testigo - José Manuel Capuletti

romeoyjulietta

Romeo Y Julietta con una Testigo (Romeo and Juliet with a Witness), 25.5" x 18" oil on linen

José Manuel Capuletti was a student of Salvador Dali (I’ll bet you guessed that) and a favourite of Ayn Rand’s (but maybe not that). His work, she said,

_Quote has the passionate intensity of Spain, the elegance of France, and the joyous, benevolent freedom of America.

View his Full Collection and Bio at the Cordair Gallery, which carries many of his works, including this one.

The Games blame

The media always loves a fiasco, so for them the ongoing Commonwealth Games story is a gift that will just keep right on giving.

But they’re always better laughing at a fiasco than they are analysing their causes. And Stephen Franks reckons it’s “embarrassing to be a New Zealander, watching our media search for New Zealanders to include in the blame for India's shame.”

_Quote The usual media line on relationships with peoples who have been colonised deplores any hint of 'judgment' or being patronising. Officials who fail to "understand" the excuses for failure (including the cultural 'necessity' for bribery and nepotism) are held to be nasty relics of imperial arrogance. Yet what can be more arrogant than blaming sports officials for failing to supervise as for children, the performance of a government in one of the world's most powerful countries, a nuclear armed nation with a prickly pride and some of the world's leading businesses.
    Of course in reality we know that India has been hobbling itself for generations with socialist governments …
    What makes India's democracy so venal and its love of red tape such a drag on its hard working and intelligent business people?  To what extent should businesses share the blame? Or does the blame rest with the Indian intelligentsia, which (like here) perpetuates hostility to the values that create wealth, through dead minds in the commanding heights of education … ? Is it simply that there is a tipping point of Chris Trotters and Matt McCartens and Finlay McDonalds, which no amount of business competence can outweigh?

Good questions all, and better than any I’ve seen asked so far about the Games fiasco.  Are India’s Hank Reardens more encumbered by Bertram Scudders than ours? (Hard to believe, surely.) Or, with our own world sporting showcase now just months away, is it a case of there but for the sake of karma* go us?

* * * *

* Karma might be one answer, suggests Bernard Darnton: “3000 years of being soaked in the idea that you don't control your own destiny could lead to an ingrained cultural learned helplessness. But is it too cute to tag hundreds of millions of people with one word?”

What a grand final! Same again next week?

724205-goddard Collingwood and St Kilda tore each other part in Melbourne on Saturday. That was some Grand Final!  After 2 hours of fast-paced, high-skilled, throat-tightening, bone-crunching, buttock-clenching action—after St Kilda came back in the last six minutes with one of the best Grand Final marks of all time (right, by Brendon Goddard—video here) to put themselves ahead and avoid the unmentionable by just a whisker—at the end of those two hours of non-stop action, scores were still locked at 68 each ... and players and fans realised that rather than this being either the end of their road this season or the culmination of their dreams, that they would all be back at the MCG again the same time next week to do it all over again.

That’s right.  The AFL Grand Final ended in a draw.  No extra time.  No penalty shoot-outs. The game gets replayed next week.

Only fair, I’d say, when it’s clear that after a full game neither tem could beat the other.  Which meant neither team could claim to be the champion.

The game on Saturday was a gruelling mental battle in its purest sense, punctuated by a series of truly heroic moments. In the end neither side would accept defeat and neither side was defeated. Surely there was some beauty in the glorious mess of it all.

Goddard At the end of the game, players were utterly spent and almost unbelieving.

Asked what he was going to tell his players back in the sheds, Collingwood captain Nick Maxwell was for once lost for words. He was rescued by both coaches however, who reached into their bags of clichés to assure everyone, including themselves, they’d be back bigger and better next week.

Just like most of the fans, who get to have another week of football to enjoy, and another belter of a game to look forward to.

That’s  good for footy.

Just as long as the Saints don’t the Pies pull out the premiership at the end of it.

That wouldn’t be.

x

x

Oh, and just in case you want to see some other marks to which you can compare this one …

ECONOMICS FOR REAL PEOPLE - “The Politics of Economics: Property Rights & the Rule of Law”

UoA Econ Group 28 Sept-1

Tomorrow evening at our regular Auckland Uni economics meet-up, we discuss an important but frequently overlooked topic in economics. 

Most economists and economic historians disregard the very political and legal foundations of their subject.
    Economic reasoning can be likened to a suspension bridge—you can have all the fancy engineering and analysis you like, but at some point all that fancy talk has to reach down into the solid rock of law and secure political institutions.
    Yet most economists take these foundations for granted. They think of economics only as a discussion of economic data, or mathematic formulae. But those data and those equations—and, more especially, all the assumptions behind them—growth is a function of “capital formation,” for example—are all highly derivative abstractions, mere cables on the suspension bridge.
    The solid rock that underpins all the major economic assumptions are the foundations of property rights, enforceable contracts and an independent judicial system—underpinnings that you disregard at your peril.
    So why does virtually every economist ignore them?
    This week, we’ll take a flying visit through some of the major assumptions underpinning all economic reasoning that economists hardly ever discuss.

        Date: Tuesday 28th September
        Time: 6pm
        Room: University of Auckland Business School, Owen G Glenn Building, Room 317 (Level 3)

All welcome, from students, to non-students. 
Look forward to seeing you then!
Fraser, Julian & Peter

The High Cost of Marketing and Selling an Invention

Guest post by patent attorney, entrepreneur and author Dale Halling.

Inventors and critics of the patent system often ignore or are ignorant of the high cost of marketing and selling a new product embodying an invention.   I discussed this cost in an earlier post, Invention- A Financial Analysis.  This cost is the variable Mi in the equation I developed as part of the financial analysis.  Another paper that discusses this additional cost that inventors incur in marketing and selling their invention compared to a “me-too producer” is The Nature and Function of the Patent System[1].  Kitch, the author, explains:

_Quote Even in the case of an innovation patented in fully commercial form – as is the case with many relatively trivial patents – the firm must make significant investments to simply distribute and market the invention.  But expenditures necessary to identify the market for the product and to persuade potential customers of its utility can easily be captured by competitive imitations.  Absent a patent on the product, the incentives to provide information to purchasers about their need for a product as opposed to information about the particular characteristics of the seller’s product are limited.  The trademark law protects only the names and symbols identifying the seller’s product; it confers no protection against imitators of the product itself.  Thus competitors can ride on the demand for the product created by the first seller without incurring the expenses necessary to inform buyers of the advantages of the product.  Only in the case of a patented product in a firm able to make the expenditures necessary to bring the advantages of the product to the attention of the customer without fear of competitive appropriation if the product proves successful. 
    This aspect of the cost of introducing innovations is stressed here both because managements find that marketing is a major cost in innovation and to illustrate that even in the case where nothing remains but to make and sell the patented invention, there are significant costs whose return could be appropriated by competitors.  Absent a patent, firms have less than the optimal incentive to invest in providing information about and techniques for using the new technology.
[2]

Inventors need to take these additional costs into account when undertaking a new venture.  There are several strategies that can be used to reduce these costs.  For instance, teaming with an existing company that has a strong market presence (marketing channel partner) in your marketplace.  Another solution is to invent only line extensions to a company’s existing products.  This second solution is common for large companies and is why large companies are not known for inventing revolutionary or disruptive technologies.

Critics of the patent system have to answer why they believe inventors will develop new technologies when it puts them at a cost disadvantage compared to copiers.

[1] Kitch, Edmund W., The Nature and Function of the Patent System, Journal of Law and Economics, Vo. 20, No. 2 (Oct., 1977) pp. 265-290.
[2] Ibid. p. 277

Lawless Legislators: The Federal Rupture of the Rule of Law

Guest Post by Jeff Perren

My article Lawless Legislators has been published at Pajamas Media—discussing how, in recent years, the rule of law has succumbed to the rule of men. I hope you'll weigh in with your thoughts on the topic, both here and there. 

Thanks,
Jeff

Friday, 24 September 2010

Friday Morning Ramble: The ‘we’re screwed’ edition

It’s election weekend in Auckland and elsewhere, and I couldn’t be less interested. In Auckland, for example,  we have a choice between a clown who talks responsibility but who can’t be trusted with his own credit card, and a buttoned-up buffoon who talks about keeping rates down after having run a record of raising rates every years, while increasing Auckland’s debt to nearly one-billion dollars. It’s not a vote either of these jerks deserve, but the reality check of a good kick up the arse.
Whoever wins, it certainly won’t be ratepayers.
So following
Bernard Darntons lead, and having diligently read through the candidates' booklet, I promptly put my voting paper in the shredder.
Anyway, I haven’t done a Ramble here for a few weeks, so there’s a bit of a backlog of good links and stories to tell. So let’s dive in…

gilf (1)

Cloud

Here’s The Laughing Clowns getting into the religious material …

… Barry Adamson getting out some Miles Davis…

… … Jazz On the Tube celebrating John Coltrane’s birthday this week (he would have been 84) with
fifteen linked videos illustrating his wide range including Miles Davis...Eric Dolphy...Wes Montgomery...Stan Getz...Elvin Jones...McCoy Tyner...and a rare trio with pianist Wynton Kelly..

…and if, like me, you love this gorgeous piece by Ralph Vaughan-Williams, you’ll have the same dilemma of wondering whether you can endure it bracketed by the world’s most popular elevator music in order to watch the APO perform it next month

That’s all from me, have a great weekend.
PC
PS: As it’s Grand Final weekend for Australian Football, my beer this weekend is a genuine Australian masterpiece: the Little Creatures Pale Ale.

Cheers!

paleale_Large (1)

Thursday, 23 September 2010

‘Water-Lily Pond’ - Claude Monet

Claude-Monet-Water-Lily-Pond-II

The Water-Lily Pond (Le Bassin aux Nymphes), Calude Monet, 883mm x 931mm, 1899

Now this is actually pretty cool.

In my mailbox this morning was a picture of the Mona Lisa, and another of Claude Monet’s Water-Lily Pond.  Not full-size pictures, you understand, but bigger than A4, and faithfully reproduced on a canvas simulacram.  These are nicely done.

The offer is one of those complicated Reader’s-Digest type of “send-in-this-lucky-coupon-now” pieces of runaround, but what it boils down to is that if you somehow contrive to get on their mailing list and then either make the right cancellations or the right payments at the right time, you can get several of these very fine prints for very little .

They have a website at www.imponline.co.nz, and you can apparently phone them on 0800-446291 if you want to get in on this.  I’ll leave the rest to you, including deciding whether or not you want to.

In the meantime, I invite you to enlarge and then stare at Claude’s painting for a few minutes. If it doesn’t come to life while you’re staring at it, I’d almost* pay for your prints myself. Because, by Galt, the old bugger knew what he was about.

* I said “almost,” alright!

“Give back”? To whom? Why? [update 2]

gates-buffet Bill Gates and Warren Buffett are asking American billionaires to “give back” the majority their billions .  To “give back” more than half. “ Those of us who have been very fortunate have a duty to give back,” says Buffett associate Charles Munger.  A duty.

This is clearly a moral cause, wouldn’t you say? A “duty,” indeed! A duty that makes no sense.

And give back? From whom was their vast wealth supposedly taken? The concept makes no sense at all.

So far 40 of the wealthiest Americans have signed the Giving Pledge, as it's known. As people who have an enormous respect for those who create enormous wealth, Yaron Brook and Don Watkins urge them in an Open Letter in the latest Forbes magazine to think again

_Quote The premise underlying the Giving Pledge is that so long as you were pursuing your own goals and well-being, what you were doing wasn't moral. Only by making the good of others your primary aim and sacrificing your wealth to meet their needs do your actions acquire ethical significance.
    Virtually everyone today shares that view--but what if it's wrong? What if your greatest moral achievement consists, not in giving away your wealth, but in having produced it? What if morality is really about guiding you in making the most of your own life--not commanding you to serve the needs of others? What if the most virtuous thing you can do in life is to pursue your own happiness?

It’s a point that’s made too rarely, but one that can’t be made too often: There is more virtue in producing wealth than there is in giving it away—not least because without production is a central requirement of human life, and without it neither happiness nor philanthropy (nor even human survival) are even possible; more virtue in pursuing your own happiness than placing yourself in the service of others—“but, according to the Giving Pledge, what makes you happy shouldn't be your primary concern.”

Is it better to give than to receive? It’s better to produce.

Buffett & Gates seem to think their wealth is something to be ashamed of. That them having wealth is a reason to apologise to those who haven’t. That giving their wealth away will make people think better of them, and them of themselves, but keeping it and producing more won’t.

_QuoteIt is no accident that the Giving Pledge is not a call for charity but a public pledge to give [say Brook & Watkins] … 
    The Pledge treats your wealth, not as a justly earned reward, but as a gift from society--one that came with plenty of strings attached…  
    But your wealth was not an undeserved gift. Every dollar in your bank account came from some individual who voluntarily gave it to you--who gave it to you in exchange for a product he judged to be more valuable than his dollar. You have no moral obligation to "give back," because you didn't take anything in the first place.

Businessmen like Warren Buffett & Bill Gates have nothing for which to apologise, and much of which to be very proud indeed.  Not because of their philanthropy, but because of their enormous productive ability—and the products they’ve made and invested in that make each of us happier and more productive.  That’s the biggest service these two walking engines of production could provide, and already are. About that, they should feel nothing but pride.

They are naturally entitled to do what they wish with the wealth they themselves have created, but to consider their enormous wealth as undeserved and its possession as some sort of sin that must be atoned for—and to encourage others to view it their own wealth that way too—is not something about which they  should feel pride. About that, they should be ashamed.

UPDATE: Like many other people, says philosopher and business-ethics lecturer Stephen Hicks, I am troubled when I hear the phrase “giving back.”

_QuoteThe usual scenario: A successful person makes a donation to a worthy cause but downplays any praise by saying “I’m only giving back.”
    The usual gentle rejoinder is to point out that the phrase assumes that the giver has taken something from others in the first place — he’s borrowed or stolen something and in “giving back” is merely restoring it to its rightful owners. That zero-sum assumption is usually untrue: most donors have earned what they have. So the phrase “giving back” contains within it an injustice: a false accusation.
    Yet there is more to it: the phrase also denies the benevolence of the giver. If you are only giving back what is rightfully someone else’s, then you do not deserve any special praise for your action. Your benevolence need not be acknowledged or honored.
    So the phrase really is a double injustice: it implies that you do not deserve what you have and it denies you any credit you deserve for your benevolent act. (Or to put it abstractly: It is the imputation of an undeserved negative and the denial of a deserved positive.)
    So far so bad.
    But it gets worse…

For which read on, where you will not only discover why this popular use of “giving back” is injustice compounded, where there might be legitimate uses of “giving back,” and also for some  insightful comments on the link between “giving back” and the fundamentally flawed ethics of so-called “social justice and of “stakeholder” theory.

Second, I am not saying (read my lips, I am not saying) that people should not give their money away to causes which they deem worthy, and which they consider advance their own self-interested goals.

True enough, a billionaire may legitimately value a new yacht above the many uses many deserving charities might do with that money—and might legitimately value burning thousand dollar notes before giving it to an undeserving alleged charity like Sea Shepherd or Sue Bradford’s Kotare School.  But the reason many billionaires for many years have donated generously to build libraries, endow university chairs and fund teaching hospitals (and a myriad of other valuable charity works) is that, in George Reisman’s words, they are not “unthinking brutes incapable of understanding or appreciating the wider benefits resulting from such things as education and thus unwilling to support such activities voluntarily.”

In so doing, they do not give donations as alms—not because of some non-existent duty to “give back”—but because “they serve their own selfish values.” In donating to promote competent educational charities, for example, “they would provide to some significant extent both for the value they attach to living in a civilized society and to passing on such a society to their children…”

Let’s play let’s pretend again with Ahmadinejad

05.09.18.UNrehearsed-X  There’s something seriously wrong with this picture, don’t you think?  While Iran-backed guerrillas continue to attack and kill Afghanis and coalition troops in Afghanistan, Mahmoud Ahmadinejad visits New York to collect photo opportunities, address the U.N., and lap up adulation.

CARI.Ahmadinejad _Quote There’s so much wrong with this picture, it’s hard to know where to begin [says Elan Journo]: Iran’s Mahmoud Ahmadinejad is in New York City to gloat and pontificate, and, incidentally, attend the U.N. assembly.
    Outraged yet?  Recall that this is the head of the regime that — by the acknowledgement of
our own government — is responsible for at least one-quarter of the deaths of American soldiers in Iraq (and probably much more, as I explain in my book). The same regime that has been financing, encouraging, training, equipping Islamist fighters to carry out attacks against U.S. and Western targets across the world. The same regime that is responsible for the murder of Americans across three-plus decades. The same regime that gunned down in the streets peaceful protestors objecting to its theocratic rule.

There’s sure as hell something wrong with this picture.  Why pretend this is a man, or a regime, with peaceful intentions?

And speaking of pictures …

Myths Sissy Teenage Girlscox

DoNotReadThis-X  Obama & Ahmadinejad

Douglas gets dirty on Key [updated]

The headline is “Sir Roger gets his act together.” The first question might to which might be, “What took him so long?”

This National-led government, to which Roger Douglas and Rodney Hide lend their support and their votes, has as a stated goal “to catch Australia by 2025.”  How’s that project going, you ask? Look at the tale of the tape:

62520_470791336759_9030741759_7130318_2695947_n At this rate we’ll be lucky to catch Tasmania.

tassies-poor-cuzzie-20082 So, as Douglas says this morning, if John Key is looking to catch Australia, it’s by a process that looks something like this:

61546_472526316759_9030741759_7172498_4001891_n

PS: This, by the way, is an example of what ACT should have been doing all along: not giving John Boy’s government the blank cheque of their support, but pointing out this govt’s failure to do anything like what needs to be done. 

Nothing else but proselytising for their ideas is going to expand ACT’s withering market share with voters--and nothing would make John Boy’s ministers take them more seriously than support being offered only on a case-by-case basis, with their vote made conditional upon whether or not measures being voted on moved toward freedom and prosperity rather than away from it.

But that’s a horse that has long bolted.

_Quote The fact remains that National KEPT the Labour policies it railed against in opposition in full knowledge that they are bad for New Zealand's economic future.
ACT however would have been far more potent staying out of government and building support for the kind of reform National will not undertake.
Why vote ACT when Roger spouts good policy but supports a govt that does not?
What a mess.

QUOTE OF THE DAY: On property

_Quote Any material element or resource which, in order to become of use or value to men, requires the application of human knowledge and effort, should be private property--by the right of those who apply the knowledge and effort."
        - Ayn Rand, quoted by J. Brian Phillips & Alan Germani in
                                   “The Practicality of Private Waterways

Wednesday, 22 September 2010

‘Earthmover’ – David Knowles

Earthmover

Says artist David Knowles,

_Quote Over thirty years ago I read Atlas Shrugged by Ayn Rand. From that I developed a concept of Man as the creator of his environment, and that idea was concretised into an image of a young man controlling a large earth-moving machine.

And here he is. Man the creator. Man, the shaper of his world.  From thought to inception, not by the power of muscles, but by the power of the mind—the power to conceive and create the machinery that can shape his very environment.

How to complicate maths education

Having had success in encouraging illiteracy over past decades by removing phonetic teaching from classrooms—refusing to teach children the very abstract tools by which they can decode text, replacing them instead with guesswork and a multiplicity of random concretes—educators the world over have also been doing the same with mathematics, quietly removing (for example) the means by which children can make sense of simple multiplication tasks.

In this video, Washington State educator MJ McDermott just how thoroughly today’s educators have made a complicated mare’s nest out of simple mathematical tasks, replacing reliable and easily understood algorithms with complicated procedures and guesswork.

If you understand the phenomenon Ayn Rand called the crow epistemology, you might understand just how successfully the “new” systems being taught for multiplication won’t teach students mathematics so much as “blow their crow.” 

[Thanks to reader Falafulu Fisi for the link]

DOWN TO THE DOCTOR’S: Canterbury Corporatism, Garrett’s Impending Strikeout, & Our Declining Economic Freedom

_richardmcgrath Libertarianz leader Dr Richard McGrath ransacks the newspapers for stories and headlines on issues affecting our freedom.

This week:  Canterbury Corporatism, Garrett’s Impending Strikeout, and Our Declining Economic Freedom

1. - DOM-POST: “Workers get $6m in wage subsidies after quake disruption: The government has paid out $6m in wage subsidies to 7000 workers hit by the Canterbury earthquake… the government has set aside $15m for the grants but Mr Key said it could cost up to $100m.”

The problem: At the current numbers of people subsidized, this is $2.4m a week corporate welfare for Canterbury small businesses. That money has to come from somewhere. The govt either prints it (thereby eroding the savings of New Zealanders), borrows it (saddling our children and grandchildren with debt) or extorts it from the very people it is meant to protect from arbitrary predation. In any case, lower-income workers are being fleeced to subsidise businesses and employees who were quite capable of purchasing disaster or income protection insurance for themselves. Poorer people are being taxed to fill the pockets of the rich.

My suggestion: The money to help Canterbury small businesses should come firstly from the owners of those businesses and their insurers, and secondly from people willing to donate money to them. But if it is felt the money for this corporate welfare has to be extracted by force, using threats of asset forfeiture and incarceration, the first victims of this should be the people of Christchurch City, Canterbury and the adjoining and surrounding provinces. Wonder what that would do to the chances of re-election for Bob Parker and John Key?

2. - NZ HERALD: “Anyone except Douglas, says Key: Prime Minister John Key has said he could work with anyone as leader of ACT – except Roger Douglas.”

The problem: John Key could sit quite comfortably in government with Rodney ‘Super City’ Hide and David ‘Jackass’ Garrett, but not with the man who delivered New Zealand from the Polish shipyard of Muldoonism. Anyone with lingering fears that John Key was hiding a free-market agenda behind the smile and wave will be vastly relieved to find that there is nothing there. Meanwhile it appears Mr Garrett, a lawyer, may have perjured himself in an affidavit in 2005. Hey, wait a minute, David, wouldn’t that be your third strike?

A question: What would you consider a sensible sentence, David, if you end up wearing a conviction for perjury?

3. - OTAGO DAILY TIMES: “NZ third in economic freedom survey: New Zealand ranks third in the Economic Freedom of the World 2008 survey.”

The problem: Keeping in mind that the year examined was the final year before the fall of Helengrad, we can draw some interesting conclusions about the last NZ government from the Fraser Institute’s analysis of economic liberty. It appears that our overall economic freedom diminished under Helen Clark (our rating slipped from 8.64 in 1995 to 8.22 out of 10 in 2008). In five out of five parameters, we were worse off after nine years of Helen and Michael. The most telling statistic was Size of Government, which score slipped from 7.46 to 6.14 out of 10 over the same thirteen years, even as the size it measured increased out of bounds. But that’s what happens when you bloat the Labour-voting public sector by 30%.

My suggestion: Like an engorged leech, the state sector bleeds this country. It should be gently but firmly prised off the body politic and told to make its own way in life under its own steam.

And look: Countries “liberated” through Marxist rule (Angola, Venezuela), Islamic theocracy (Algeria, Iran) and totalitarian dictatorship (Myanmar) don’t do at all well. What a surprise. Cuba, adored by Michael Moore, wasn’t even rated. Wonder why.      

When the people fear the government, there is tyranny - when the government
fears the people, there is liberty.
- attrib. to Thomas Jefferson